July 16, 2019 / 8:23 PM / 5 months ago

UPDATE 1-Fed's Evans says half-point cut in July could speed up hitting inflation target

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CHICAGO, July 16 (Reuters) - Chicago Federal Reserve President Charles Evans said on Tuesday that an interest rate cut of a half a percentage point at the U.S. central bank’s July policy meeting could speed up achieving the Fed’s inflation goal.

Evans, who feels rates should be reduced half a percentage point by year’s end at the least, said on Tuesday, “There is an argument that if I think it takes 50 basis points before the end of the year to get inflation up, then something right away would make that happen sooner.”

Evans’ comments to reporters at a CNBC economic forum demonstrate how the Fed’s rate decision at the end of this month may hinge on the varying set of rationales policymakers have cited in deciding whether to reduce rates.

Fed officials have signaled plans to cut rates this month, and a reduction of some magnitude is considered a virtual certainty by investors.

But Evans noted that while his reason for reducing rates might justify a larger cut, those who see a rate reduction largely as a matter of protecting against the risks posed by a weakening global economy might well want to go more slowly.

“For those who are thinking this is more risk management — a strong domestic economy facing some uncertainty — you could easily argue to go a little slower,” Evans said. (Reporting by Howard Schneider Editing by Leslie Adler)

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